Nikkei drops as hawkish Federal and trade concerns curb risk appetite

TOKYO: Japan’s Nikkei share average dropped on Thursday after the US Federal Reserve forecast a slightly faster pace of rate hikes this year, while concerns about a US-China trade war also hurt sentiment.

The Nikkei ended down 0.99 per cent to 22,738.61.

As expected, the Fed raised its benchmark overnight lending rate a quarter of a per centage point to a range of 1.75 per cent to 2 per cent, on the back of strong US economic growth. Policymakers also projected a slightly faster pace of rate increases in the coming months.

Worries about global trade also dented investors’ risk sentiment. US President Donald Trump is expected to meet top trade advisers to decide whether to activate threatened tariffs on billions of dollars in Chinese goods.

“The Fed’s hawkish tone does not help the market, which is more worried about a global trade war, which would have a negative impact for a much longer term,” said Takuya Takahashi, a strategist at Daiwa Securities.

Shares of exporters such as automakers and electronics stocks came under pressure.